Noah's House Hacking Case Study 55
Today Noah Evan's shares his mother-in-law house hacking case study story from Nampa, Idaho.
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Noah's House Hacking Case Study 55
As a real estate investor, Noah was relatively familiar with the world of buying and selling houses. When he uncovered the idea of housing hacking through a popular podcast, he was excited to take pursue the opportunity of living for free.
After ruling out the expensive duplexes in the area, Noah found a house with a mother-in-law suite opportunity through the MLS. He moved forward with the deal on the $220,000 home quickly in 2020.
Noah was able to obtain the home with just 0.5% down through a special FHA financing program in Idaho. Once he obtained the property, he paid for a few major renovation projects. Noah hired contractors to add electricity and plumbing for a kitchen area, add additional windows in each bedroom, and expanded a bathroom. In total, the renovations cost around $12,000. Although Noah ran into some contractor issues, he was mostly satisfied with the outcome. In fact, one of the contractors became Noah's business partner.
When it was time to find a tenant, Noah used Zillow. He took the time to meet each applicant in person to understand who they were. Since he lives on the property, he collected the rent checks by hand.
House Hacking Rental Income
Now it's time to find out exactly how profitable this house hack was!
Noah used a specialized FHA loan to put down 0.5% on the home. With that, his monthly mortgage payment is $1,200 including taxes and insurance. But he has been able to rent out the extra space to create a positive cash flow each month. However, the utilities cut into the profits to create a breakeven cash flow situation.
- Gross rent: $1,375
- Mortgage payment: $1,200 + $175 in utilities
- Cashflow before maintenance and vacancies: $0
- Housing costs before house hacking: $1,300
- Total housing savings: $1,300
Overall, Noah has been able to create significant savings through his house hacking experience. With the money he's saved, he has been able to invest in more real estate flips. In fact, he is now doing 20 flips each year.
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The Learning Curve
Overall, Noah is very happy with his house hacking experience. He is able to live happily with his wife and two dogs without covering an expensive mortgage. With that, living mortgage free is one of the best decisions he's ever made.
Looking back, he would have separated out the heating and cooling so that the tenants could cover their own utility bills. Additionally, he would have added additional insulation between the units to minimize the noise levels.
If you are considering house hacking, Noah recommends doing your research. He says, “Do you research, figure out what type of house hacking strategies will work best for you and your lifestyle. For me and my wife said she didn't wanna share any part of the house therefore I saw a split level home or a home with a basement being the best set up as people could live below us with their own separate entrance and exit. I also thought that since there be two levels it would be easy to bring electric and plumbing either up or down. This particular house we bought also had to separately fence front and back yards which worked for having two separate living spaces.”
If you are interested in creating your own house hacking story, then be sure to:
- Check out our Ultimate Guide to House Hacking
- Listen to The House Hacking Podcast
- Read more case studies for inspiration. You never know how dramatically your life can change through this one choice!
- If you choose to pursue a house hack of your own, then please share your story with us! We would love to showcase your success.
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